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The Economic Surveys (2014–15 and 2015–16) have, over the years, stressed on the need to create jobs to meet the needs of a burgeoning population. However, the question as to which sector has the most potential to create jobs and at what level have often been left unanswered. The objective of this paper is to identify the sectors of the Indian economy that are able to generate different types of skilled employment, both directly as well indirectly, by estimating their employment linkage effects with varying levels of skills using the Input–Output technique. The contribution of this paper is that it re-defines skills by combining three types of education, including general, vocational and technical education, and thus defines four types of skilled employment categories—low skilled, low-medium skilled, medium-high skilled, and high skilled employment. The paper incorporates these four types of skilled employment within the Input–Output framework, using the World Input–Output Database (WIOD), and estimates the forward and backward linkage effects related to employment with respect to four different skill types for India. The estimation of these employment linkage effects is critical to identify the key employment-generating sectors in the Indian economy with varying levels of skill.

The study also urges policymakers to boost some select sectors in order to enhance different types of employment, thus proposing a way to take forward the ‘Skill India Mission’.

Over the last two decades, less than half of the Indians who sought jobs actually got them, with many more millions set to enter the job market over the next two decades. Despite extensive unemployment and under-employment, however, there is a growing shortage of skilled workers. One of the ways to address this skills shortage is to train unemployed youth and those who have dropped out of the labour market by imparting them the skills they lack, focusing on higher levels of both cognitive and non-cognitive skills that can enhance the adaptability and employability of workers. Another route is to formally recognise workers with skills acquired through informal and non-formal learning, and enhance the skills of such workers by providing them potential pathways into the formal labour market. A third route is to incentivise on-the-job training, not only in large firms, but also in micro, small, and medium industries (MSMEs), and building greater awareness on the returns to skilling. While the focus of policy makers has been on the creation of jobs, which is a daunting challenge, there is also need for discussions on job creators or entrepreneurs, and on the key skills that can equip more labour market aspirants and the existing workers to become job providers /opportunity entrepreneurs. As production processes have increasingly become more automated, the challenge is to impart transferable skills to workers that can enable them to ride through the wave of automation, and any resulting structural shifts in the labour market. A growing and related challenge is also to address the issue of women’s participation in the workforce. This necessitates not only a rethinking of ways to create appropriate jobs for women, but also equipping more women with the requisite life skills, while also training women to be able to work in both the skill-intensive and capital-intensive sectors in addition to the labour-intensive industries.

Demographic transition, economic uncertainty and technological changes have come together to create a concoction in India that has the potential to boil over economically and socially, if not skilfully managed. One path that could steady the future of India is to both create jobs that will absorb the burgeoning population and make the population work ready so that they can be absorbed in those same jobs. The three basic questions in economics contextualised within India’s skills market boils down to the following. What skills should we equip the workforce with? How should we equip them? For whom should we equip them? These questions are examined in the historical context to serve a dual purpose – first, to understand how they were answered in the past to derive lessons, if any, therefrom, and second, to understand why we are what we are today in terms of the education, employability and employment (3–E) challenge. The same questions are examined for the post-Independence era. While overall, skills as measured by education show a positive association with economic growth, drilling down shows several inconsistencies.  Given the shortage of skilled workers and high demand for them, there is a high premium for skills, i.e., tertiary education. Prospective employees aspire for education that will enable them to get a secure job.  However, a majority falter in the path and the ones who are able to get the education, still do not have the skills to get the aspirational job.  With other channels of human capital investment limited, general educational attainment continues to present the only sustainable path.  India is not addressing the micro distortions in terms of incentives and signals to employees (prospective or otherwise) and firms who make choices of about investments in education, on-the-job training, migration, creation of jobs, technologies to adopt, which in turn result in not addressing the above mentioned macro issues, thereby creating a vicious cycle.

The objective in this paper is to define the full range of employability skills from Pre-Kindergarten to Higher Education and integrate it to the ground-level realities in the Indian context.   It clearly identified that there are four types of skills –cognitive, socio-emotional, physical or psychomotor and job-specific skills. Every job role requires a different permutation and combination of these skills.  These skills are mapped across foundational and advanced skills. The third objective is to propose an integrated perspective on education and training for India, which provided the maximum flexibility to workers to determine their own path.  Education up to Class X has to be made compulsory.  There should be two pathways after that – general schools that offer general education with vocational education and vocational schools that offer vocational education with general education.  Apprenticeships needed to be made compulsory in the latter.  Internships could be offered in both types of schools.  The quality had to be strengthened to deliver a full range of skills at all levels. Even after landing a job, options for re-skilling and upskilling had to be offered.  However, a demand-supply side delineation of the full range of the skill set shows that the supply-side is only delivering part of the skill set and even that suffers from quality issues. For example, nowhere active listening and active learning are recognised as key foundational cognitive skills, neither in policy nor in literature. However, these are two skills that employers want.  The matching, if at all, was either at the very low-end at the primary/middle school level or at the college level.